USDIndex pushed under 106.00 on Friday (closed at 106.50) as the US Services sector contracted for first time in 2 years. US Stocks sank into close (NASDAQ -1.87%), big declines for tech companies, led by a -39% for SNAP. Asian markets also negative to start the week, (Hang Seng -1.18%, Nikkei -0.79%). European FUTS lower too. Yields tanked to closed down -4.74%. Oil under $94, Gold under $1725 and BTC under $22k. High Inflation, rising Interest Rates and weak Consumer and Business Confidence continue to weigh on sentiment. The CME “FedWatch Tool”¹ still has a 21.3% chance of a 100bp rate hike on Wednesday. Russia & Ukraine signed agreement to allow grain exports to start but then Russia shelled Odessa, UK PM race is getting increasingly bitter and Lavrov is on a tour of Africa.
Week Ahead – FED Rate Decision, US GDP and Earnings Season sees the technology giants (APPL, AMZN, MSFT, GOOGL & META) plus many more companies all reporting Q2 data.
- USDIndex up from lows at 105.96 on Friday (US Services PMIs big miss and into contraction at 47.00 vs 52.7) now trades at 106.60.
- Equities – USA500 closed -0.93% -37pts (3961), (week +2.4%). US500FUTS at 3958 now. SNAP +39.04%, TWTR +0.8%, (Earnings not as bad as expected), AMEX +1.9% (Earnings beat & increased Revenue forecast) Verizon -6.8% (Profits cut) META -7.6%, GOOGL -5.6%.
- 106 companies have reported; 75.5% have beat estimates (average for last 4 quarters 80% beat.) Strong Dollar hindering.
- Yields 10-year yield significantly lower at 2.783%, trades lower again at 2.75% now.
- Oil & Gold had volatile & weak sessions last week – USOil traded from over $102 support down to $94.15 lows, and is lower again today at $93.00. OPEC next meet Aug 3. Gold fell to $1680 lows last week but recovered $1700 and trades back to $1725 now.
- Bitcoin rallied to $24K, last week, breaking away from the $20k level but is back to $21.8K today
- FX Markets – EURUSD remains pressured but rotates at 1.0200, USDJPY down to test 135.50 last week – now 136.30. Cable breached the key 1.2000 last week, trades at 1.1990 now.
Overnight –
Today – German Ifo Survey, UK CBI Trends, US National Activity Index, Earnings from Ryanair, Philips, Vodafone, Infosys, Newmont and NXP Semiconductor.
Biggest FX Mover @ (06:30 GMT) USDCHF (+0.40%). Rallied from a test under 0.9600 on Friday to 0.9645 now next resistance 0.9658 & 0.9675. MAs aligned higher, MACD histogram negative but rising, RSI 52 & rising, H1 ATR 0.00125, Daily ATR 0.00800.
¹https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
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Stuart Cowell
Head Market Analyst
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